Tennessee, housing, market, Tennessee housing, Tennessee housing market, housing market, construction, third quarter, 3rd quarter, 2010, foreclosures, Nashville, Knoxville, Memphis, mortgage, delinquencies, housing prices, MSA, MSAs, Chattanooga, Clarksville, Johnson City, Cleveland, Jackson, Kingsport, Bristol, Morristown

David A. Penn

English

Research Papers in Economics

1234123412341234123
Table 1. Selected Tennessee employment indicators (thousands, seasonally adjusted)
Employment by industry (nonfarm) 2009.1 2009.2 2009.3 2009.4 2010.1 2010.2  2010.3
Total nonfarm 2,670.9 2,619.4 2,596.4 2,592.7 2,594.0 2,610.0 2,607.0
Goods-producing sectors 443.4 419.4 409.3 405.0 403.1 406.8 407.8
Manufacturing 326.6 309.1 302.4 301.1 300.8 303.4 305.8
Services-providing sectors 2,227.4 2,200.0 2,187.1 2,187.7 2,190.8 2,203.2 2,199.2
Labor force 3,045.3 3,030.1 3,010.5 2,995.4 3,002.4 3,033.6 3,038.2
Total employment 2,752.8 2,705.9 2,683.4 2,674.1 2,682.1 2,721.1 2,746.9
Unemployed 292.5 324.3 327.0 321.3 320.3 312.4 291.3
Unemployment rate  9.6% 10.7% 10.9% 10.7% 10.7% 10.3% 9.6%
Source: Bureau of Labor Statistics
T
his quarterly series is supported by a  
Tennessee Housing Development Agency grant.
Economic Overview 
Tennessee’s economy improved somewhat during the third quar-
ter, as employment gains pushed the unemployment rate down
to 9.6 percent from 10.3 percent in the previous quarter.  The
unemployment rate remains very high, however, 16th highest
among the 50 states (Table 1). 
Initial claims for unemployment insurance fell during the third
quarter following a rise in the previous quarter (Figure 1).  An
important indicator of the future unemployment rate, initial
claims averaged 6,800 a week, moving closer to the pre-reces-
sion level of 6,000 per week.  
Payroll employment, however, showed little change in the third
quarter.  Of particular interest is the fact that manufacturing con-
tinued to show positive job growth in Tennessee, adding 2,400
jobs from the previous quarter.  Job growth in the services-pro-
viding sectors dipped, however, due to losses in the financial
industry and the information sector.  Gains in manufacturing and
losses in the services sectors are just the opposite of pre-reces-
sion trends.
Housing Construction
Single-family home construction activity dropped sharply dur-
ing the third quarter, falling 19 percent from the previous quar-
ter (Table 2).  The third-quarter level of 10,100 units is one of the
lowest since the beginning of the recession (Figure 2).  Activity
continued on page 2
berc 
TENNESSEE HOUSING MARKET
3rd Quarter 2010 
Figure 1. Tennessee initial claims for unemployment insurance 
(quarterly averages of weekly data, seasonally adjusted)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Source: U.S. Dept. of Labor, Employment & Training Administration
2006 2007 2008 2009 2010
David A. Penn, Director • Business and Economic Research Center • Jennings A. Jones College of Business • Middle Tennessee State University 9 11 12 12 1
0
Tennessee Housing Market Brief 3rd Quarter 2010
Figure 2. Tennessee single-family home permits (seasonally adjusted annual rate, thousand units)
berc  2
2008 2009 2010
1
Seasonally adjusted
Trend
Table 2. Permits issued for privately owned new housing (thousands, seasonally adjusted annual rate)
Single-Family Permits Multi-Family Permits Total Permits
Quarter Tennessee South U.S. Tennessee South U.S. Tennessee South U.S.
2007.2 29.3 528.3  1,031.7  5.5 204.3 425.0 34.9 732.7 1,456.7
2007.3 27.0 474.7  916.3  8.1 163.3 398.0 35.1 638.0 1,314.3
2007.4 22.3 414.0 786.0  7.8 175.3 402.3 30.1 589.3 1,188.3
2008.1 18.7 366.3  671.3  5.8 170.0 353.7 24.5 536.3 1,025.0
2008.2 17.4 333.7 633.0  2.2 152.7 428.0 19.6 486.3 1,061.0
2008.3 15.4 283.7 547.7  7.0 162.7 311.0 22.3 446.3 858.7
2008.4 9.9 215.3 417.7 4.6 106.3 221.0 14.5 321.7 638.7
2009.1 10.7 202.7  366.7  2.6 83.0 179.0 13.3 285.7 545.7
2009.2 11.1 222.7 423.7 2.9 67.3 134.0 14.0 290.0 557.7
2009.3 12.6 248.7 478.0 1.9 54.7 122.7 14.6 303.3 600.7
2009.4 13.4 254.0 491.3 2.2 56.3 134.7 15.6 310.3 626.0
2010.1 13.5 270.7 524.7 6.3 57.3 130.0 19.8 328.0 654.7
2010.2 12.6 235.0 447.7 3.4 60.7 141.3 16.0 295.7 589.0
2010.3 10.1 207.0 403.7 5.2 69.3 155.3 15.3 276.3 559.0
Change from previous quarter -19.4% -11.9% -9.8% 52.7% 14.3% 9.9% -4.1% -6.5% -5.1%
Change from previous year -19.6% -16.6% -15.6% 164.8% 26.8% 26.6% 5.1% -8.9% -6.9%
Source: Census Bureau 
25
20
15
10
5
T
h
o
u
s
a
n
d
s
Source: Census Bureau, with seasonal adjustment
during the previous four quarters had ranged between 12,500
and 13,500 units; the demise of the homebuyers’ tax credit,
growing uncertainty regarding the economic recovery, and very
slow job growth are the likely causes of the decline.  The South
and the United States also experienced decreases during the third
quarter, but these declines were not as severe as Tennessee’s.
Multi-family construction activity provides an altogether dif-
ferent picture, with activity 52 percent higher in Tennessee from
the previous quarter.  Over the year, multi-family permit activ-
ity has more than doubled, albeit from very low levels.  Reports
of higher rents and occupancy rates for apartments offer more
evidence of increased demand for multi-family housing.  The
same trend is noticeable for the southern and U.S. markets, with
both areas experiencing large increases from the previous quar-
ter and previous year.
The large upsurge in multi-family permits is sufficient to cause
total permits (the sum of single-family and multi-family) to
show a gain over the year, with Tennessee rising by 5.1 percent.
Compare this with over-the-year losses in the South and the
United States.
Real Estate Transactions and Mortgages
Tax collections from real estate transactions declined, down 10.8
percent from the second quarter.  The trend of transaction tax
collections clearly shows the effects of the homebuyers’ tax
continued on page 3
continued from page 1
2 3 4 5 6 7 8 9 10 11 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8234123412341234123412341234123
credit, as homebuyers rushed to buy, followed by a period of
reduced activity (Figures 3 and 4).  The current level of activity
is similar to that of the recession low in the first and second quar-
ters of 2009.
By contrast, mortgage tax collections jumped 11 percent during
the third quarter, boosted by increased refinancing activity due
to lower mortgage rates.  Compared with last year, however,
mortgage tax collections are still down, declining from the peak
in 2006.
Home Sales
Not unexpectedly, home sales dropped to a recession low during
the third quarter in the three metropolitan areas tracked by this
report (Figures 5-7), with all three areas experiencing declines
of more than 20 percent from the second quarter.  Third quarter
home sales are now at the lowest level since the beginning of
the recession.  Lower sales are partly due to the expiration of
the tax credit but also likely reflect increased uncertainty and
frustration regarding the very slow pace of job growth during
this recovery.  Home sales may well bounce back a bit in the
fourth quarter, as the market searches for a new equilibrium
without the tax credit in the background.
Mortgage Delinquencies and Foreclosures
Mortgage delinquencies and foreclosures present a mixed bag
for the third quarter:  mortgages past due have increased, but
foreclosures started during the quarter are lower for Tennessee
Figure 4. Mortgage tax collections (seasonally adjusted annual rate)
$30
$90
$80
$70
$60
$50
$40
M
i
l
l
i
o
n
s
Source: Tennessee Department of Revenue and BERC
berc  2
$190
$170
$150
$130
$110
$90
$70
$50
Millions
Source: Tennessee Department of Revenue and BERC
1
2003 2004 2005 2006 2007 2008 2009 2010
continued on page 4
continued from page 2
Figure 3. Real estate transfer tax collections (seasonally adjusted annual rate)
234123412341234123412341234123 1
2003 2004 2005 2006 2007 2008 2009 2010
Tennessee Housing Market Brief 3rd Quarter 2010(Table 3).  Past due mortgages rose somewhat to 10.88 percent
of all mortgages, compared with 10.82 percent for the previous
quarter.  The continuing high level of past due mortgages is an
outcome of high unemployment and slow labor market gains,
as more households experience financial stress.
New foreclosures dipped to 0.86 percent of all mortgages in Ten-
nessee from 0.98 percent for the previous quarter, returning to
about the same level as in the fourth quarter of 2009.  We should
take little comfort from this improvement, as it may simply
reflect administrative backlogs and slower processing due to
questions about the validity of some of the foreclosure process-
ing apparatus.
Home Prices
The price of existing homes continued to decline during the third
quarter but at a slower pace, according to the Housing Price
Index computed by the Federal Housing Finance Agency (Table
4).  Though the state and most metropolitan areas moved a lit-
tle closer to price stability, this goal still remains elusive.  Of the
10 metropolitan areas in Tennessee, eight experienced a slower
rate of price decline over the year.  For example, home prices
dropped 3.9 percent for the state during the third quarter, com-
pared with a 4.6 percent first-quarter decline.  Only one metro-
politan area, the Clarksville MSA, experienced a very modest
price increase over the year, up 0.2 percent, and the Johnson
City MSA edged very close to price stability, down just 0.3 per-
cent over the year.
Conclusion
On balance, the housing market took a step backward during the
third quarter, as single-family home construction and home sales
slipped to near the lowest levels since the beginning of the reces-
sion.  Rising multi-family construction activity takes some of
the sting out of the decline in single-family homes, and home
prices showed some improvement.  This is a quarter in which the
background economic conditions improved, but the particular
situation for the housing market did not.
Table 4. Change in housing prices over the year
Area 2009.1–2010.1   2009.2–2010.2
U.S. -6.7% -4.9%
Tennessee -4.6% -3.9%
Chattanooga MSA -3.3% -2.7%
Clarksville MSA -0.5% 0.2%
Cleveland MSA -3.2% -3.2%
Jackson MSA -5.8% -1.2%
Johnson City MSA -1.4% -0.3%
Kingsport-Bristol MSA -1.6% -1.6%
Knoxville MSA -3.5% -4.0%
Memphis MSA -6.4% -5.4%
Morristown MSA -6.6% -7.5%
Nashville MSA -4.9% -3.7%
Nonmetro areas of the state -5.4% -4.3%
Source: Federal Housing Finance Agency All Transactions Index
Table 3. Mortgages past due, new foreclosures started, and foreclosure inventory 
(% of mortgages serviced, seasonally adjusted except foreclosure inventory) 
Tennessee United States
Mortgages  Foreclosures started  Foreclosure inventory Mortgages  Foreclosures started  Foreclosure inventory
Quarter past due during quarter at end of quarter past due during quarter at end of quarter
2008.1 7.73 0.71 1.50 6.35 0.99 2.47
2008.2 7.96 0.77 1.52 6.41 1.19 2.75
2008.3 8.35 0.77 1.58 6.99 1.07 2.97
2008.4 9.16 0.83 1.77 7.88 1.01 3.30
2009.1 10.03 0.93 1.98 9.12 1.34 3.85
2009.2 10.33 0.99 2.17 9.24 1.47 4.30
2009.3 10.62 1.02 2.26 9.64 1.42 4.47
2009.4 10.48 0.88 2.34 9.47 1.14 4.58
2010.1 10.82 0.98 2.41 10.06 1.17 4.63
2010.2 10.88 0.86 2.23 9.85 1.17 4.57
Source: Mortgage Bankers Association of America and BER
Note: Table includes revisions to previous quarters.
berc  4
Tennessee Housing Market Brief 3rd Quarter 2010
continued on page 5
continued from page 341 1
15,000
I
n
v
e
n
t
o
r
y
C
l
o
s
i
n
g
s
I
n
v
e
n
t
o
r
y
Closings
Inventory
Figure 5. Single-family sales and inventory (seasonally adjusted quarterly average of monthly figures) 
0
500
1,000
1,500
2,000
2,500
3,000 16,000
15,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
berc  5
Tennessee Housing Market Brief 3rd Quarter 2010
C
l
o
s
i
n
g
s
I
n
v
e
n
t
o
r
y
Closings
Inventory
Nashville Area
Memphis Area
Knoxville Area
16,000
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
6,000
2006 2007 2008 2009 2010
2 3 2 3 4 1 2 3 4 1 2 3 4 1 2 3
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
C
l
o
s
i
n
g
s
6,000
Closings
Inventory
2,500
2,300
2,100
1,900
1,700
1,500
1,300
1,100
900
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
Source: Greater Nashville Association of Realtors, Memphis Area Association of Realtors, Knoxville Area Association of Realtors, and BERC

Tennessee Housing Market: 2nd Quarter 2010

http://frank.mtsu.edu/~berc/pdfs/housingbrief3Q10.pdf

Tennessee Housing Market: 2nd Quarter 2010

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics